Chapter 10 synthesis and integration

Product Concepts

Although the definition of a product may seem intuitive, it has a very specific meaning in the vocabulary of marketers. A product can be a tangible item, a service, or an idea but above all it is the result of an exchange. The product is the foundation of the marketing mix of product, price, promotion, and place.

Products fall into two basic categories of consumer and business products. Subsets of consumer products include convenience products (inexpensive, casual purchases made with little effort); shopping products (more expensive items requiring research and comparison); specialty products (items for which there are few substitutes); and unsought products (products not actively sought by the buyer). A product may be part of a product line (closely-related items) which is likewise part of a product mix. A product mix consists of all the products sold by the organization such as Campbell Soup's product mix of canned and packaged soups, sauces, frozen foods, and convenience foods. Having product lines enhances advertising and packaging uniformity and also results in greater economic efficiency in terms of the standardization of all the product and marketing elements.

Adjusting positioning is an inevitable necessity for product lines in terms of function, quality, and style and 'planned obsolescence' is a component of many product lines to drive more sales. However, sometimes merely repositioning to respond to changed demographics, declining sales or changes in the social environment is adequate to boost sales of a product line. Other common responses to improve sales include extending product lines. This can prove to be problematic if lines are overextended, resulting in product dilution or cannibalizing the sales and resources of more successful products.

A critical component of marketing a product is branding: not only is having a strong brand name important but also a brand 'mark' (the unspoken value of the brand) is demanded to generate brand equity (the overall value of the brand to the company). Branding is important because it generates not only new initial sales but repeat sales and ultimately greater customer loyalty.

Manufacturer's brands (such as Kellogg's) offer the advantage to retailers of generating customer loyalty through mass advertising; attracting new shoppers; enhancing the prestige of the store; and rapid delivery. Private brands (such as Trader Joe's), however, allow sellers to earn higher profits; bring less pressure to mark down the price; and give the seller greater flexibility because they have control over the brand. Private brands also tie the customer to their stores, not to an outside brand. 'Captive' brands are sold exclusively at the store (such as Kenmore at Sears) but are manufactured by third parties. Many brands are trademarked: a trademark is the exclusive right to use a brand: trademarks derive from use rather than from registration.

Packaging is another important component of branding. Functions of packaging include both functional and decorative aspects including containing and protecting contents; promoting the brand; facilitating storage; and also facilitating recycling. The labeling of the packaging can be promotional (such as cartoon characters on children's cereal boxes) or informational (such as a calorie count or instructions on how to use the product).